Correlation Between Transimex Transportation and Elcom Technology

Can any of the company-specific risk be diversified away by investing in both Transimex Transportation and Elcom Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Transimex Transportation and Elcom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Transimex Transportation JSC and Elcom Technology Communications, you can compare the effects of market volatilities on Transimex Transportation and Elcom Technology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Transimex Transportation with a short position of Elcom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transimex Transportation and Elcom Technology.

Diversification Opportunities for Transimex Transportation and Elcom Technology

-0.65

Correlation Coefficient

Transimex Transportation  Elcom Technology

Excellent diversification

The 3 months correlation between Transimex and Elcom is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Transimex Transportation JSC and Elcom Technology Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcom Technology Com and Transimex Transportation is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Transimex Transportation JSC are associated (or correlated) with Elcom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcom Technology Com has no effect on the direction of Transimex Transportation i.e., Transimex Transportation and Elcom Technology go up and down completely randomly.

Pair Corralation between Transimex Transportation and Elcom Technology

Assuming the 90 days trading horizon Transimex Transportation is expected to generate 8.28 times less return on investment than Elcom Technology. In addition to that, Transimex Transportation is 1.05 times more volatile than Elcom Technology Communications. It trades about 0.01 of its total potential returns per unit of risk. Elcom Technology Communications is currently generating about 0.08 per unit of volatility. If you would invest  1,875,000  in Elcom Technology Communications on September 14, 2024 and sell it today you would earn a total of  830,000  from holding Elcom Technology Communications or generate 44.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	79.35%
Values	Daily Returns

Transimex Transportation JSC  vs.  Elcom Technology Communication

Transimex Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transimex Transportation JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Transimex Transportation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Elcom Technology Com

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elcom Technology Communications are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Elcom Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transimex Transportation and Elcom Technology

The main advantage of trading using opposite Transimex Transportation and Elcom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transimex Transportation position performs unexpectedly, Elcom Technology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Elcom Technology will offset losses from the drop in Elcom Technology's long position.

The idea behind Transimex Transportation JSC and Elcom Technology Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.